Biodiversity Decline and Population Externalities

To understand the problem of the global biodiversity decline, we set up a north–south model of population and income determination. Although biodiversity decline is mainly caused by primitive agricultural activities in some poor countries, we show that policies of resource management or Pigouvian taxes, targeted solely at rectifying such activities, are often ineffective. Since the production activities in these poor countries are correlated with parents' fertility decisions, any efficient rectifications must involve a change in parents' reproduction choice as well.